Defense secretary nominee Leon Panetta said yesterday he would consider having contractors share in the cost of overbudget weapons, supports current ship-and-aircraft building goals, and is gravely concerned about cybersecurity.
Panetta, the current Central Intelligence Agency (CIA) director and President Barack Obama’s pick to succeed Robert Gates as defense secretary, faced friendly interrogators on the Senate Armed Services Committee (SASC) during his confirmation hearing. As expected, Panetta largely reinforced Obama and Gates’ stances on defense spending. Those include Gates’ concern about being cautious with implementing the $400 billion in security spending reductions that Obama wants by 2023.
“I share his concerns about the possibility of hollowing out our force,” Panetta testified. “I think that would be a terrible mistake. I share his concern about some kind of automatic across-the-board cuts and…implementing some kind of formulaic approach to cutting defense, when we have to look at each area and determine where we’re going to achieve savings in order to protect defense.”
He said that if a nascent “comprehensive review” of the Pentagon’s roles and mission indicates that $400 billion is not an appropriate number, he will share his opinion with the president. But he said he believes such a funding reduction would not harm national security.
Senators pinged Panetta repeatedly on weapon acquisition woes. He said “a lot of bad habits” developed during the defense-spending buildup following the Sept. 11, 2001 terrorist attacks.
Panetta was receptive to an idea from SASC member Lindsey Graham (R-S.C.), who suggested telling future defense contractors: “You’re welcome to bid on major weapon systems, but why don’t you share 25 percent of development costs? And at the end of the day we’re going to (have a) fixed-price (contract), not cost-plus, and if there are any overruns you share in the overruns.”
Panetta told Graham his proposal is “a suggestion worth looking at.” Panetta then reiterated Graham’s basic cost-sharing idea under questioning from Sen. Rob Portman (R-Ohio).
Panetta said he senses an “assumption” that cost increases can continue with weapon programs “and that somehow somebody’s still going to pay the bill.”
“I think what we’ve got to do is to make clear that those who are involved–and they’re great companies, they’re good people, a lot of them do a great job–that …they’ve got a responsibility here, to be able to work with us, to develop better competition, to do some of the things that Sen. Graham mentioned, in terms of absorbing some of the costs of development,” he said. “The work that they’re doing is not just money in their pocket.”
Panetta pledged to work to bolster the U.S. defense industry.
“I am a very strong believer that if we’re going to have a strong defense in this country that we have to have industries here that are American,” he told Sen. Jeanne Shaheen (D-N.H.). “We’ve got to have technology capabilities that are American. We’ve got to be able to have a base of support in this country in order to maintain our defense systems.” He said the United States must work with its allies, but that “if we are going to protect our national defense, we have got to protect our industrial base, we have got to protect our technological base.”
As expected, Panetta shied away from offering specific stances on weapon systems.
He acknowledged cost overruns with Lockheed Martin’s [LMT] F-35 Joint Strike Fighter, which SASC Ranking Member John McCain (R-Ariz.) highlighted.
“There are extensive costs associated with how (the F-35) is being developed, and I think we have to watch it very carefully,” Panetta told Sen. Saxby Chambliss (R-Ga.).
When Sen. Susan Collins (R-Maine) asked about the Navy’s goal of bolstering its fleet to 313 ships, Panetta said: “I strongly believe that the Navy has to project our force throughout the world and that the Navy is obviously crucial to that mission, and I agree with the ship numbers that have to be developed for the Navy in order to be able to do that.” He said “shipbuilding operations have to develop greater efficiencies” to control costs.
“Greater presence of an industrial base here that deals with these issues will provide the kind of cost savings that we will need in order to fulfill that mission,” he added.
Panetta said he does not back the F-35 alternate engine, developed by General Electric [GE]-Rolls Royce and opposed by Obama and Gates, and does support building two submarines per year. He was responding to questions from Sen. Richard Blumenthal (D-Conn.).
The nominee shared concerns expressed by Sen. Jack Reed (D-R.I.) about needing to prepare for cyber battles.
“There’s a strong likelihood that the next Pearl Harbor that we confront could very well be a cyberattack that cripples our power systems, our grid, our security systems, our financial systems, our governmental systems,” Panetta said, adding that “we have to aggressively be able to counter that.”
“It’s going to take both defensive measures as well as aggressive measures to deal with it,” he said. “But, most importantly, there has to be a comprehensive approach in government to make sure that those attacks don’t take place.”
The SASC and full Senate must confirm Panetta’s nomination.
Panetta has directed the CIA since Feb. 13, 2009. He previously served as President Bill Clinton’s chief of staff and director of the Office of Management and Budget. He was a Democratic congressman from California from 1977 to 1993, and chaired the House Budget Committee during his final four years in the House.
“I’m a creature of the Congress, and I believe that the Pentagon is made stronger by your oversight and by your guidance,” he told the SASC yesterday.